It isn’t that Gov. Jerry Brown isn’t happy to hear Legislative Analyst Mac Taylor say such nice things about California’s financial future, but he would like it better if the state’s top bean counter wasn’t so darned enthusiastic about the good news.
A remarkably upbeat report issued Wednesday projected a state awash in black ink, with growing budget surpluses as far as the fiscal watchdog’s eyes could see.
“The state’s budgetary condition is stronger than at any point in the past decade,” Taylor said in the report. “The state’s structural deficit – in which ongoing spending commitments were greater than projected revenues – is no more.”
Now that’s an unqualified endorsement of Brown’s financial strategy, which called for combining a voter-approved temporary tax increase with strict budget controls to close the state’s long-running deficit and put California in a position to take advantage of an improving economy.
Yet every time Taylor uses phrases like “higher revenues,” “multi-billion dollar surpluses” or “a $5.6 billion reserve,” it makes it that much harder for Brown to hold back Democratic legislative leaders anxious to rapidly restore the hits that many state programs designed for low-income residents took during the down fiscal years.
And if happy days truly are here again, as the LAO report suggests, why not start improving what we’ve got or design new programs to deal with the myriad problems the state still faces?
There’s a simple, two-word answer to that worldview: Gray Davis. When the dot com boom of the late ‘90s sent state revenues soaring, Governor Davis and the Legislature were only too happy to funnel that short-term money into new, long-term programs, which any first-year economics student could tell you is a recipe for disaster. Or, in Davis’ case, getting recalled.
Brown has made it clear that he has no intention of riding the budget seesaw, expanding programs when times are good and then chopping them when the inevitable downturn arrives.
In the past couple of years, the governor has played hardball with the Legislature’s Democratic leadership, even going so far as to veto what he said was an unbalanced budget in 2011, the first California governor to ever take that action.
Even last year, with the Prop. 30 taxes coming in and Taylor and other budget mavens predicting better fiscal times ahead, Brown managed to convince legislators to sign on to what Taylor characterized as commendable budget restraint.
Because Brown and the Legislature limited new commitments to a small handful of areas, the legislative analyst said, the state has “a budgetary situation for 2014-15 that is even more promising than we predicted last year.”
No politician, Republican or Democrat, ever ran for office because he wanted to slash programs for the people who voted for him. And in the instant gratification world of term limits, one year of budget surpluses might be happenstance, but two years of growing revenues and predictions of surpluses all the way to 2020 are a trend that can’t be ignored.
Just weeks from now, the governor will be unveiling his 2014-15-budget proposal, based on the same glittering numbers Taylor used in his report. Expect Brown to take a purposely dull approach with the new spending plan, with much of the new money allocated for paying back some of the $11.5 billion owed to California’s K-12 schools and community colleges under Prop. 98 rules, chipping away at the “wall of debt” the state has built up over the years, paying down growing state retirement liabilities and modestly increasing funding for the University of California and the California State University systems.
Don’t be surprised to see Brown try to preempt his fellow Democrats by setting aside some money to restore pieces of the state’s tattered safety net for the poor.
But whatever Brown decides in that preliminary budget, you can bet it won’t be enough for Democratic legislators and the interest groups that support them, particularly in an election year. That battle over spending is likely to be the most important state story in the first six months of the year. And this time it’s a battle that the governor might not win.
Cutting a budget when times are tough is no fun at all for any politician and the trims that need to be made hurt real people.
But the financial decisions made when the state is flush and looking at good times ahead can be just as divisive and even more important to the future of California.
John Wildermuth is a longtime writer on California politics.